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How to Source The Best Factory in China

The Differences of Using A Bona Fide China Factory & China Trading Company

Understanding the type of China supplier you’ll be working with is vital to the control of the production of your order.  

A China Trading Company will work with a variety of China factories and generally, you’ll not have direct contact with the China factory producing your order. This can be an important factor in the quality control of the production line for your product, as you’ll not have direct access or communication.

Generally a Trading Company will be more expensive, as they will put their profit margin on top, as they’ll handle all the process from sampling to mass production as well as arrange your shipping to UK.

There are some benefits to using a China Trading Company over working directly with a China factory, as they’ll be able to send your order to the factory that they have relationships with and that can produce to your required specifications. They may also be able to find a factory that has a lower MOQ (Minimum Order Quantity) which may suit your order requirements.

Ideally, it’s best to work direct with a bona fide factory, as this gives you direct access and ultimately control of communication with the relevant departments, whether it’s your sales manager, design team, sample manager, production manager, quality control manager or shipping department.

The China Factory Must Have The Experience to Manufacture Your Products

Some China factories will accept your order, but may not have the necessary experience if you’ve added new details or components that are new to them. It’s typical of a China sales manager to say ‘yes’ ‘yes’ ‘yes’ to most of your questions, in order to get your order and deposit payment. Some products may require specialised machinery and an experienced production line to manufacture and assemble your product.

Eco-Friendly Materials & Sustainable Manufacturing In China

It’s important in these times to work with factories which adopt a sustainable approach to their manufacturing. This will include using natural, eco-friendly & recycled materials as well as production methods reducing chemicals and other harmful substances.

A social welfare program for factory employees should also be checked.

Does Your China Supplier Have It's Own Export Licence?

Many factories that export from China do not have their own Export Licence. Where this is the case, they will use a 3rd party agent to fulfill the export. You have to be careful as to who has the liability should something go wrong with your shipment. Payments to either the factory or the export agent may also carry risks as to who is ultimately responsible. 

Potential Problems When China Factories Outsourcing Work to Other Factories

Some factories in China will outsource some elements of the production process to other factories. This may be due to a lack of specialist machinery, experienced assembly workers, or just an overload of orders. Where this happens, this may cause quality control issues and slight differences to your approved sample. Always ask if the full production and quality control will be in-house and not outsourced.

China Product Safety, Testing, Certification & UK Compliance

Most products will require certification in one form or another, whether for safety issues or product regulations to comply with UKCA (or CE) compliance standards. It’s important to have the certificates which your supplier offers, checked and verified to ensure that they relate to your batch order and are relevant to the latest testing standards.

Typical tests will include the following.

  • UKCA (Various Tests)
  • CE (Various Tests)
  • RoHS

It’s best to use an internationally recognised Lab Testing Company such as the following.

  • SGS
  • Intertek
  • TUV
  • UL

The Importance of Brand Components For Your China Production

Components will have multiple supply chains to choose from and this will ultimately affect the final costs of your product. You should stipulate with your China supplier at the very start of your China order process, the brands to be used for each component. Your QC checks should ensure that the correct component brand has been used for your China supplier production run. 

China Product Sample Approval & Sign-off

The China supplier sample you approve is what (theoretically) should be mass produced, shipped and delivered. Careful consideration must be given to ensure all aspects of the sample have been confirmed and approved. It’s normal for each party to have one sample each and this will be signed-off by you and your supplier.

Any amendments, after agreeing the sample should be documented and signed by both parties. This may happen if original components specified are not available for the mass production.

The Pro Forma From Your China Supplier & Why it's important to Check

The Pro forma from your China supplier is in effect your contract with the supplier. You must ensure that all the purchasing order details are correct as this will be relied on should you have any problems with your shipment when it arrives in UK. 

Some points to ensure are included in the Pro forma contract are the following, although there will be many other points depending on your product.

  • Full China supplier details and this should match the beneficiary bank account name.
  • Full product details and specifications of your order.
  • Price details including incoterms (EXW, FOB etc etc)
  • Packing & packaging details. This should be clear and include photos of the master cartons with your shipping mark.
  • Delivery timeline, when the goods will be ready to be shipped.
  • Payment schedule for the initial deposit payment as well as the final payment.
  • Warranty & returns policy.

As mentioned, the above is just a short list of points that should be included in the Pro forma.

Important Details to Confirm With Your Supplier Before Production Starts

It’s vital to have communication with your China supplier throughout the order process, especially between the sample approval and mass production. It can often be the case, for varying reasons, that there maybe slight changes to specifications for the mass production run, due to changes within the component supply chain. You should stipulate that you must be notified of any changes, irrespective of how small the change is.

Getting Your China Shipment Packaging & Packing Procedure Confirmed

Packaging is vital for a number of reasons, but primarily to protect the product from damage during shipping and delivery from China to UK. Confirming the product packaging as well as the master carton packing is important and this should not be left to the factory, without your input. You must also advise the factory of your Shipping Mark, this is typically 2 or 3 letters from your company name to signify that all the cartons belong to the same shipment.

Warranty & Returns to Agree With Your China Supplier

Whilst no-one expects any faulty items or returns, it’s inevitable that there will be a very small percentage of defected products within a shipment, this should typically be capped at between 1% – 2% (This will depend on your product). It’s important that there is an agreed warranty agreement as well as any returns procedure. Depending on your product, some factories may agree to a 1% of ‘spare parts’ to cover the warranty.

Payments - Who, When & How to Pay

Payment terms with your China supplier will differ with each supplier and vary with the total order cost. Typically this will be 30% deposit when the order is confirmed and the balance payment before shipment. 

Some China suppliers will offer balance payments against ‘Original Shipping Documents’  being received by your UK shipping forwarder.

Payment currency will typically be in US$, although some factories will accept payments in other currencies, typically GBP, EURO & RMB.

Payments through a “Currency Exchange House” can often be cheaper than sending payments via your bank and are likely to give better exchange rates for your GBP.

Always ensure your payments are to the same company name in the Pro forma. Check the details closely!

Quality Control Inspections in China

3rd party quality control inspections for your China shipments are advised for all your orders, even repeat orders. A new/repeat order may have a new component supplier, which needs to be checked.

There are many quality control inspection companies you can choose from and this is a cost effective element for your China import.

Not to carry out a QC inspection may well result in false economy.

Types of quality control inspections may include the following.

  • Pre Shipment Inspection
  • During Production Inspection
  • Pre Loading Inspection
  • Container Loading Supervision
  • Random Sample Selection

Export Documentation for Importing From China to UK

It’s important to have your China shipment export documents checked, as any errors when submitting to both China Customs & UK Customs can, and often will result in delays and additional costs.

Typical documents should include the following.

  • Original Bill of Lading
  • Commercial Invoice
  • Packing List
  • Product Certification for UKCA or CE Compliance

Products that contain batteries will also require an MSDS (Material Safety Data Sheet) report.

Shipping From China to UK - Preparation & Options

Your China shipment should be prepared to suit the shipping method you’ve selected to reach UK. 

Sea freight options from China, will be with either a Full Container Load (FCL) or Loose Container Load (LCL) for smaller shipments. If using LCL, you should ensure that the packaging is sufficiently strong to take account of all the man handling that will take place with loading/unloading at various points from the factory in China to your warehouse in UK.

Air shipment options from China to UK are either via Air Cargo (airport to airport) or door-2-door via an international courier, typically DHL, UPS or FeDex.

Over recent years, shipping by train from China to Europe and UK has become increasing ly popular, due to quicker transit times and daily train departures.

In all cases, it’s important that all your boxes/cartons are marked with your company initials, this is known as ‘The Shipping Mark’.

Comparing quotations for shipping from China to UK, and reading the small print regarding what the quote includes, can often save you money on your final shipping costs.

The Process When Your China Shipment Arrives In UK

If sending your China shipment to UK by sea, you’ll need a UK freight forwarder to handle the Customs Clearance procedure as well as Duty payments & delivery to your warehouse. I would advise against trying to do this yourself to save a few pounds. It will probably end up being false economy.

The same applies to air cargo shipments. Your UK forwarder will handle everything and deliver to your door.

Train shipments can be delivered to your door with all duties paid (incoterms – DDP). Your shipping agent should be able to offer the best option for you.

International express couriers will deliver door-2-door and will handle all the UK Customs formalities. Generally, you will pay the courier the Duty payments, either before or after the delivery takes place.

10 Frequently Asked Questions

  1. How can I find a good factory in China?

The best way of finding a good factory in China is one of the following.

  • Visiting a Trade Fair in China or Hong Kong relevant to the product industry.
  • Using a Trade Platform, but you’ll need to do due diligence including carrying out a 3rd part factory evaluation.
  • Use a Sourcing Agent.
  • Enquiring from your Industry Trade Association

2. How do you source high quality products from China?

The best way to source high quality products is to first select 3 – 6 suppliers that you have carried out due diligence with and request a sample from each.

Compare the quality, specifications, prices and communication with each supplier to determine which you feel is the right supplier for your product and who you will be most comfortable in working with.

3. How do I find a factory in China to make a product?

Finding a factory in China to manufacture your product will need preparation and research on your part and these will include the following procedures.

  • Create a PID (Product Initiation Document), detailing materials, dimensions, specifications, features and price point of the product you want to have manufactured.
  • Shortlist potential manufacturers to work with.
  • Carry out a full evaluation on the supplier.
  • Visit the factory if possible, this will answer your many questions as to the suitability of the factory.

Alternatively, use a Purchasing Consultant.

4. Is it better to use a Purchasing Agent for my China import?

A good Purchasing Agent will carry out all the stages required for your China Import including the following.

  • Source the best factory for your product.
  • Carry out an evaluation on the factory and a personal visit to carry out further checks if required.
  • Provide and communicate your detailed requirements with the designer, sample maker and production manager.
  • Approve the sample before sending to you, to ensure there are no delays or increased shipping costs if the sample is faulty.
  • Carry out quality control inspections at key stages of the production.
  • Ensure the correct documentation is prepared to clear UK Customs.
  • Compare and arrange shipping costs and timelines.
  • Arrange UK forwarding, UK Customs clearance and delivery to your door.
  • After sales service.

5. What is a sourcing company?

A sourcing company will search potential suppliers and shortlist the best factories for your order, together with your product specifications and order quantity.

6. What should I check before using a Chinese manufacturer?

The main areas to check before using a China manufacturer will include the following.

  • Business Registration Certificate – this will include all the official details of the company.
  • Main products they’re manufacturing.
  • Product certification.
  • Minimum order quantities.
  • Countries they’re exporting to.
  • Sample costs and timeline.
  • Production timelines.
  • Product warranty and returns procedure.
  • Branding capability to your requirements.
  • Packaging options to suit your requirements.
  • Incoterm options.
  • Request a BSCI or SEDEX report to check the social responsibilities and employee welfare.

7. How much do sourcing companies charge?

A Sourcing Agent will charge according to how much or how little you want them to get involved. The areas where a Sourcing Agent can help will include the following areas.

  • Source potential suppliers.
  • Carry out a supplier evaluation.
  • Check & approve the sample.
  • Carry out quality control inspections at stages to suit you.
  • Arrange shipping to your door.

8. What is difference between OEM and ODM

OEM (Original Equipment Manufacturer) will manufacture products according to your design and specifications. They will provide all the components.

ODM (Original Design Manufacturer) will manufacture their designs, although you will be able to modify as well as brand the product to your requirements.

9. How do I pay a Chinese manufacturer?

The most common way to pay a China manufacturer is the following:

Samples – use PayPal to keep your costs down.

Mass Production – Bank Transfer to the company bank account. This is typically 30% with your order and remaining balance before shipment. This may differ slightly for each supplier. Ensure the production sample has been approved and ‘signed off’ before paying any deposit and would strongly advise having a 3rd party inspection before paying any balance.

The safest way to pay a manufacturer is by using a Purchasing Agent who will verify the goods before passing payment to the supplier.

There are other ways to pay a China supplier and this will depend on if you’re buying via an online platform, such as Alibaba and they may offer different methods.”

10. How do I verify a company in China?

The best way to verify a company in China is to carry out a 3rd party inspection company as they will be more thorough in their verification and will know what to look for. They will also be able to communicate directly with the supplier and not via an online platform.

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